Beyond Structured Settlements

NY Court of Appeals Denies ELNY Review

The New York State Court of Appeals (Court of Appeals), New York's highest judicial authority, has denied a Motion for Leave to Appeal a February 6, 2013 decision bythe Appellate Division of the Supreme Court of the State of New York, Second Department which rejected a legal challenge by Executive Life of New York (ELNY) structured settlement shortfall payees to the ELNY Order of Liquidation and Approval of the ELNY Restructuring Agreement signed by New York State Supreme Court Judge John M. Galasso on April 16, 2012.

The appeal challenging the merits of the ELNY Liquidation Order had raised three primary issues each of which the Court of Appeals' decision effectively rejected:

• Due Process - "Did inadequate notice and the denial of information to Objectors (ELNY structured settlement shortfall payees), along with the selective application of the Civil Practice Law and Rules, deny Objectors a fair hearing as required by principles of due process?"
• Immunity - "Did the Supreme Court exceed its subject matter jurisdiction or otherwise err in granting immunity to the Receiver and others in their personal capacities, where such immunity is not provided for by statute, is inconsistent with the common law, and is unsupported by evidence?"
• Injunction - "Did the Supreme Court exceed its jurisdiction or otherwise err in permanently enjoining claims against the Receiver and others in their personal capacities, where such injunction is not provided for by statute or the common law, and no evidence was adduced at the hearing?"

The Court of Appeals decision effectively ends litigation challenging the merits of the ELNY Liquidation Order and permits the National Organization of Life and Health Insurance Guaranty Association (NOLHGA) to proceed with the ELNY Restructuring Agreement including substantial annuity payment reductions for more than 1400 structured settlement recipients.

ELNY Contempt Order and Class Action Lawsuit

Another anticipated result of the Court of Appeals decision will be the filing of a brief by legal counsel for three ELNY structured settlement shortfall payees (objector respondents) to perfect their appeal of a Contempt Order issued January 25, 2013 by Judge Galasso. Based upon previous court filings and out-of-court statements, they are expected to argue that Judge Galasso's Contempt Order violates the United States Constitution.

Following Judge Galasso's Contempt Order, attorneys representing the structured settlement shortfall payees voluntarily dismissed their federal court ELNY class action lawsuit , without prejudice, preserving their right to refile claims and tolling the statute of limitations. At that time, shortfall payee attorney Edward Stone characterized the voluntary dismissal as a "strategic decision" attributable to the Contempt Order which left open the possibility of additional fines for continued legal efforts to protect ELNY shortfall payees.

In a letter written to United States District Judge Jesse M. Furman prior to the voluntary dismissal of the ELNY class action lawsuit, shortfall payee attorney Roger Christensen quoted from the 1964 United States Supreme Court decision in Donovan v. City of Dallas: "Early in the history of our country, a general rule was established that state and federal courts would not interfere with or try to restrain each others proceedings. That rule has continued substantially unchanged to this time."

Christensen's letter continued: "It could not be more clear that a state court cannot enjoin a federal action or use contempt proceedings to preclude citizens' attempts to have their claims heard in federal court."

The original class action Complaint named Jeanice Dolan, Daniel A. Malin, Keith Vincent, and other similarly situated ELNY shortfall victims, as plaintiffs, and Benjamin M. Lawsky, Superintendent of Financial Services of the State of New York, in his non-regulatory capacity as ELNY's Receiver, including predecessor ELNY Receivers (Rehabilitator), Metropolitan Life Insurance Company (MetLife) and Credit Suisse Group, AG (Credit Suisse) as defendants.

Based upon allegations of defendant misconduct (see: ELNY Allegation Timeline), the original class action Complaint requested the following damages and relief:

• "Damages equaling the full present value of each Class Member's annuity issued by ELNY, less any amount determined to be owing to Plaintiff under the terms of ELNY's liquidation;
• "Damages equaling the amount of each defendant's unjust enrichment and ill-gotten gains;
• "Attorney fees and litigation expenses, to the extent permitted by contract or law;
• "Pre- and post-judgment interest, to the extent provided by contract or law; and
• "Such other equitable relief as the Court deems appropriate."

For S2KM's complete reporting of the ELNY liquidation, see the structured settlement wiki.

 

ELNY Contempt Order Appealed

Three Executive Life of New York (ELNY) structured settlement shortfall payees (objector respondents) and their legal counsel have filed a Notice of Appeal dated February 14, 2013 challenging "each and every part" of a Contempt Order issued January 25, 2013 by New York Supreme Court Judge John Galasso "on questions of both fact and law".

Judge Galasso's Contempt Order:

• Responded to a federal class action lawsuit filed November 8, 2012 by the three ELNY structured settlement shortfall payees, as plaintiffs, against Benjamin M. Lawsky, Superintendent of Financial Services of the State of New York, in his non-regulatory capacity as ELNY's Receiver, including predecessor ELNY Receivers (Superintendent), Metropolitan Life Insurance Company and Credit Suisse Group, AG, as defendants.
• Determined the federal class action lawsuit violated three ELNY injunctions: injunctions contained in the ELNY Rehabilitation Order (1991) and the ELNY Rehabilitation Plan Approval (1992) as well as an injunction in Judge Galasso's April 16, 2012 ELNY Liquidation Order which states: "All persons are enjoined and restrained from commencing or further prosecuting any actions at law or other proceedings against ELNY or its assets, the Receiver or the New York Liquidation Bureau, or their present or former employees, attorneys, or agents, with respect to this proceeding or the discharge of their duties under Insurance Law Article 74."
• Imposed a fine, payable by the ELNY shortfall payees’ legal counsel to the Superintendent for costs, disbursements and reasonable attorney’s fees the Superintendent had incurred defending the federal class action and for pursuing the contempt application plus potential additional legal expenses assuming the Superintendent achieved a favorable result in the concurrent appeal of the ELNY Liquidation Order which was denied February 6, 2013 by the Appellate Division of the Supreme Court of the State of New York, Second Department.
• Acknowledged: "This Court is not empowered to dismiss the federal complaint outright."

Following Judge Galasso's Contempt Order and the denial of their Liquidation Order appeal, attorneys representing the structured settlement shortfall payees voluntarily dismissed their ELNY class action lawsuit without prejudice preserving their right to refile claims and tolling the statute of limitations.

Attorney Edward Stone characterized the voluntary dismissal as a "strategic decision" attributable to the Contempt Order which left open the possibility of additional fines for continued legal efforts to protect ELNY shortfall payees.  

The objector respondents and their legal counsel, attorneys Stone, Roger Christensen and Karra Porter, have six months to perfect their appeal of Judge Galasso's Contempt Order with the same appellate court that denied their earlier appeal of the ELNY Liquidation Order. Based upon previous court filings and out-of-court statements, they are expected to argue, in part, that Judge Galasso's Contempt Order violates the United States Constitution.

In a letter written to United States District Judge Jesse M. Furman prior to the voluntary dismissal of the ELNY class action lawsuit, attorney Christensen quoted from the 1964 decision of the United States Supreme Court in Donovan v. City of Dallas: "Early in the history of our country, a general rule was established that state and federal courts would not interfere with or try to restrain each others proceedings. That rule has continued substantially unchanged to this time."

Christensen's letter continued: "It could not be more clear that a state court cannot enjoin a federal action or use contempt proceedings to preclude citizens' attempts to have their claims heard in federal court." 

For S2KM's complete reporting about the ELNY liquidation, including related litigation and an Executive Life timeline, see the structured settlement wiki.

ELNY Class Action Dismissed

Attorneys representing Executive Life of New York (ELNY) shortfall victims have voluntarily dismissed an ELNY class action lawsuit without prejudice preserving their right to refile claims and tolling the statute of limitations.

The dismissal of the ELNY class action lawsuit follows:

• Contempt Order Issued - Judge M. Galasso sanctioned attorney Edward Stone and representatives of the Christensen & Jensen law firm for civil contempt February 25, 2013 for filing the ELNY class action lawsuit in the United States District Court Southern District of New York in violation of existing ELNY anti-lawsuit injunction orders.
• Anticipated Appeal of Contempt Order - Stone and Christensen & Jensen responded January 28, 2013 with a press release announcing their plan to pursue an appeal of the contempt order with the Appellate Division of the Supreme Court of the State of New York.
• Appeal of Liquidation Order Denied - The Appellate Division of the Supreme Court of the State of New York, Second Department denied an appeal February 6, 2013 challenging the ELNY Order of Liquidation and Approval of the ELNY Restructuring Agreement signed by Judge Galasso on April 16, 2012.

Attorney Stone has informed S2KM Limited the voluntary dismissal of the ELNY class action was a "strategic decision" attributable to Judge Galasso's contempt order which left open the possibility of additional fines for continued legal efforts to protect ELNY shortfall payees. Judge Galasso's contempt order provides in relevant part:

"Should [Superintendent Benjamin M Lawsky] accrue additional legal expenses, such as in filing a motion to dismiss the federal complaint upon a successful appellate result, [Stone and Christensen & Jensen] may be subject to an additional fine."

Judge Galasso acknowledged in the contempt order: "This Court is not empowered to dismiss the federal complaint outright."

Stone and the Christensen law firm maintain that the blanket immunity and permanent injunction granted by Judge Galasso in the ELNY liquidation order go beyond what Article 74 of the New York Insurance Law allows and that Judge Galasso's contempt order violates the United States Constitution.

In a letter written to United States District Judge Jesse M. Furman prior to the voluntary dismissal of the ELNY class action lawsuit, attorney Roger Christensen quoted from the 1964 decision of the United States Supreme Court in Donovan v. City of Dallas: "Early in the history of our country, a general rule was established that state and federal courts would not interfere with or try to restrain each others proceedings. That rule has continued substantially unchanged to this time."

Christensen's letter continued: "It could not be more clear that a state court cannot enjoin a federal action or use contempt proceedings to preclude citizens' attempts to have their claims heard in federal court."

For S2KM's complete reporting about the ELNY liquidation, including related litigation and an Executive Life timeline, see the structured settlement wiki.